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Author: Luke Stillman [email protected]
Editor: Vincent Letang [email protected]
The changing advertising economy has createdtremendous challenges for brands, but they have beenarmed with potent tools for success: consumer dataand advertising technology. This is a look at the ways inwhich data has shaped brand spending to date andwhat will change going forward.
As programmatic advertising completes its transitionfrom growth to maturity, the programmatic ecosystemwill go through many of the same processes that allmature industries face. An examination of how brandswill continue to audit their programmatic campaigns tosqueeze margins and improve accountability.
Brands will finally engage at scale with addressablemessaging to TV audiences. Linear addressable andOTT advertising still makes up a small fraction of totalvideo-related ad budgets, but this section examineshow that is changing, and what the future ofaddressable messaging looks like.
For the past decade, brands have focused almostentirely on targeting to deliver one creative to theperfect consumer at the perfect time. An investigationinto how extensive consumer data can be leveraged topersonalize and enhance creative to improve campaignimpact and outcomes.
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Data has Defined Digital Advertising
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The advertising economy has changed more rapidly inthe past decade than at any previous time. The consumershift from traditional media formats to digital channelshas created both a tremendous number of challengesand also opportunities for advertisers. Brands areengaging with a far more fragmented landscape thanever before, but they have been armed with a potent toolfor success: consumer data.
There are lots of ways that brands can leverageconsumer data to improve campaign outcomes. The mostdeveloped include digital HVA targeting, addressablemessaging, sequential messaging, and personalized andenhanced creative among other things. Experiments andexperience have shown that all of these can improvecampaign effectiveness, but to date most of them havebeen underused. Brands have only fully engaged withdigital targeting through programmatic techniques.
Even that single use of data has transformed what isexpected out of a campaign from planning, to targeting,execution, measurement, attribution, and post-campaign
learning. Digital targeting has produced suchtremendous results that brands haven’t needed toengage with other technologies; it attracted most of theinnovation.
As digital spending has skyrocketed, from $23 billion in2009, to more than $100 billion today, brands have alsobeen able to leverage an increasing volume of insightsinto each consumer. Below is an indication of the datafueling incremental insights into digital campaigns overtime (not necessarily when those technologies wereavailable, but when they were mainstream for mostadvertisers).
New data regulations and pressures on public companiesare introducing limitations to the granularity of availableconsumer insights. Without better insights on consumersand impressions, brands will be incentivized to engagewith technologies that go beyond just finding the rightdigital inventory at the right time to continue to push theenvelope on campaign effectiveness.
Demographics Psychographics
Online Behavior CRM Data
Keyword Signals
Geolocation Sales Data
IP Address Device ID
Social Monitoring Device Graphs
App Tracking ACR
23
117
52
US
Digi
tal A
dver
tisi
ng R
even
ues
($ B
illio
ns)
Source: MAGNA
4
Peak Data: Why, and What’s Next?There are multiple reasons to believe the continualimprovement in granularity of insights that brands haveabout consumers will slow in the intermediate term.
The first is that with the current level of insights,advertisers know a tremendous amount about eachindividual consumer. From online browsing behavior, toDevice ID, to CRM data, to offline sales, to socialmonitoring, and more, each consumer has few secretsremaining regarding their consumption interests. Even ifthere were no additional factors in play, it would still beincreasingly difficult to find something incrementallymeaningful about each consumer and correspondinglyeach impression.
Going from absolutely zero targeting, to targeting basedon demographics and web site visitation behavior, has amassive impact on impact and efficiency. The first waveof programmatic advertising in digital was a revolution.With each subsequent innovation and new data source,however, there were fewer and fewer low hangingopportunities. There are diminishing returns to all things,and the consumer data landscape has been scouredclean of most of its value.
The first headwind to incremental data granularity, arenew regulatory pressures in the advertising economy.Not only has GDPR already put a damper on theavailability of 3rd party data in the marketplace, but theCalifornia Consumer Privacy Act raises the specter offurther headwinds to come (not to mention other state-specific legislation, or the prospect of future federallegislation post-administration changes).
The most important impact on the data ecosystem,however, is not the actual impact of the regulations, butthe public company response. Regional regulations, likeGDPR, are almost certain to be adopted globally becausethe difficulty of parsing audiences across the internet.Furthermore, because privacy protections now have asocial premium with consumers, many companies areemphasizing how effective a caretaker they are ofconsumer data.
Companies are also taking this opportunity to lock moredata behind walled garden limits. Because there are somany moving parts to new regulations, and it’s verydifficult to track exactly what initiatives will bringcompanies into compliance, and which ones will betterprotect consumer information, publishers are morereluctant than ever to share data outside of their ownclosed ecosystem in the name of privacy. Over the pastyear, Facebook has limited targeting options eightseparate times under the banner of protecting privacy.Google limited their DoubleClick ID to their ownecosystem a year ago in order to promote privacy. MarkZuckerberg released an op-ed early in 2019 calling formore global privacy regulation. The biggest companieswill seize this opportunity to circle the wagons on theirdata and reinforce walled gardens.
The bottom line is that there is no longer a tailwind tonew incremental data, and the best case scenario is thatthe existing consumer data landscape remains the samerather than regressing.
In this new reality, brands will pivot their focus fromfinding the right inventory at all costs, and will insteadshift their focus to improving campaigns in other to-dateunderserved areas. Brands have achieved messaging tothe right consumer, at the right time, for the right cost.Now they have to explore delivering the right message aswell.
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What Does That Mean for Brands?Brands will have to leverage what resources they alreadyhave to improve campaign outcomes in ways that don’tjust require more and more granular audience targeting.They will do this in three ways:
1) Improving the efficiency of digital campaigns byconsolidating partners, streamlining processes, andadding accountability
2) Broadening the scope of where existing data isleveraged, particularly in TV and OTT
3) Leveraging the existing trove of consumer data notjust to target the best inventory, but also to improvecreative and enhance the consumer experience
Regarding #1, advertisers are first going to go back andclean up areas where there has been the most change,specifically programmatic advertising. When growth isextremely high as it was in the early days ofprogrammatic development, all bets are off in terms ofensuring that every step of the campaign process isstreamlined, efficient, and held accountable to highstandards. It’s not that brands are not trying to executeprogrammatic campaigns efficiently, it’s just that whengrowth is so robust and the landscape is changing soquickly, the demands of moving quickly do not allow forlayers of testing along the way.
Once things start to mature, however, many smalltransgressions no longer seem so insignificant. A fewextra fees here or there, or an inefficient path topurchase, suddenly become critical roadblocks to a cost-efficient programmatic campaign. Growth inprogrammatic ad spending will be less than 20% this yearas already the vast majority of transactions are executedprogrammatically. Rather than piling on with morespending, or leveraging deeper consumer targeting data,the lowest hanging fruit for brands is making sure what’salready in place is being executed as efficiently aspossible.
The second area of focus in this new plateaued datareality is on expanding the usage of consumer data. Indigital media, ads are laser-targeted with a very highdegree of precision. In addressable advertising and OTT,on the other hand, brands are still using only the mostbasic of targeting and with limited scope. Furthermore,while consumers have shown little tolerance for targetedads when they’re not relevant, consumers are receptiveto more helpful advertising that appears at the rightmoment, whether targeted or not, in which case it’s anengaging and compelling experience.
For example, there is a huge amount of potential to usethe existing depth of consumer information to ramp upad spending in OTT. This is the biggest disconnectbetween ad spending and consumer time spent, and as aresult brands will move quickly to ramp up targeted videospending outside of PC and Mobile.
The third and final opportunity brands will pivot to, is onthe creative side of the ledger. Today, very fewcampaigns are using data and technology to ensurecreative is appropriate for every impression, and areinstead just blanketing highly targeted users with thesame creative, any improvements on the creative sidewill improve results significantly.
Impressions are laser-targeted down to precisemoments, but creative is hardly leveraging even themost basic data such as demographics, behavior, andCRM data (laid out previously in the ‘early phase’ ofavailable data). Less than 2% of campaigns areleveraging dynamic creative. Dynamically deliveringdifferent creative iterations on the fly on PC and Mobile,as well as creating more engrossing creative ad formatsacross OTT, will move the needle significantly on results.
97%83%
68% 55%29% 25% 22% 18%
2012 2013 2014 2015 2016 2017 2018 2019
Programmatic Growth Matures
71%
2%
Programmatically Targeted
Leveraging Dynamic Creative
Display and Video Campaigns (2019)
Source: MAGNA
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Transparency & AccountabilityTransparency has been a rallying cry in theprogrammatic space for several years. Because of thesheer volume of interested parties in an averageprogrammatic transaction, it’s very difficult to ensureeverybody is following agreements, and it’s very easy forparties to lose trust in other actors. Despite brands andpublishers calling for improvements in transparency,viewability, brand safety and reducing fraud, untilrecently the marketplace was primarily focused ondeveloping ancillary verification services to ensure thatimpressions were real and valuable.
Lately the focus has shifted to one of streamliningprocessed, consolidating partners, and addingaccountability across the entire programmatic valuechain. Brands want to make sure the path to theconsumer is optimized, and to ensure they’re paying theright counterparties, and paying as little as possible toget the inventory wanted.
Fraud and fee gaming is widespread enough, and nowthat programmatic growth is maturing, advertisers arefocused on operationalizing the programmaticenvironment. This began with ads.txt and the shift to 1st
price auction dynamics last year (see MAGNA Spring2018 Programmatic Intelligence Report). Those went along way towards combatting fee gaming, removingconfusion from the auction process, and squeezingillegitimate middlemen out of the equation.
As with all industries, as the programmatic ecosystembecomes more and more mature, margins and fees arebeing scrutinized. Innovation, diversification, and noveltyall have value premiums in advertising. DSPs andprogrammatic exchanges have seen an erosion of thesethree qualities over time. Inventory access issubstantially identical across exchanges, andfunctionality is substantially identical. Furthermore,
programmatic advertising is no longer the new kid on theblock; in the advertising world a technology more than adecade old is well past middle age. As a result, techplatforms have to compete on cost, and the easier it is tolift out exactly how much is being charged for whatvalue, the easier it is for brands to partner with only thecheapest tech options.
Finally, since its inception, programmatic advertising wasseen by brands as a more cost-efficient way to accesstheir desired audiences. As premium inventory enteredthe programmatic ecosystem, prices increased, but intoday’s advertising reality savings are always a primarygoal. For this reason, cutting out non-viewable, orfraudulent impressions was always a double-edged swordfor many brands. Yes, it ensured that all impressionswere real valuable consumers, but optically it did serveto increase prices and decrease volume metrics as aresult. Squeezing prices of the ad tech ecosystem, andcompressing the transaction tech tax to programmaticcampaigns, is something that brands can universally getbehind.
There are 3 primary developments in the marketplacethat will dominate the evolution of programmaticadvertising throughout 2019:
1) The implementation of ads.cert (detailed on thefollowing page), which helps to combat many kindsof fraud that weren’t stopped by ads.txt.
2) Increased engagement with supply path optimization,to ensure that the path between buyer and seller isthe most direct possible, with every piece oftechnology on the way adding value commensurateto its price.
3) The addition of smart contracts and automatedcontractual verification to the digital purchaseprocess.
Ad Format Fraud
Unnecessary Transaction Costs
Lack of Accountability
Brands & Publishers
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Ads.cert: Closing the Door on FraudFraud is one of the largest issues in the programmaticmarketplace. While it might not have any more impact onthe value (or lack thereof) of an impression than lack ofviewability, it is a more significant issue in the minds ofbrands. Nobody wants to pay for something that theydidn’t actually receive.
Combating fraud has been a staple in the programmaticspace for years. Last year saw a significant upswing inthe adoption of ads.txt which was designed to solvedomain spoofing. There are many other forms of fraudand spoofing going on, however. Ads.cert is a newinnovation that is part of the OpenRTB 3.0 protocol thatcombats different but equally programmatic fraudulentmethods.
Ads.txt was implemented to curtail domain spoofing,where someone disguises the site they are representing,and is selling inventory at a mark-up to profit fromarbitrage. This results in a situation where a too-smallshare of proceeds go to the publisher compared tointermediaries reselling inventory at a markup. Inaddition, because ads.txt is a text file that is added to apublisher website stating what marketplaces have theright to sell their official inventory, there was the abilityfor middlemen to still be on the ads.txt list just bytricking publishers. Furthermore, because it was amanual file, there was the risk of transcription errorswhich could potentially have significant businessimplications.
Ads.cert, on the other hand, is a tool that ensures theformat of an ad is correct and prevents ad formatspoofing. It is created by the IAB Tech Lab to beimplemented globally. In the programmatic ecosystem,there are various indicators that tell a buyer howvaluable a piece of inventory is going to be. Theseinclude domain, location, IP address, device, position onpage, impressions type, and many other factors. All ofthese can be modified to make a piece of inventory looklike it’s more valuable than it really is.
Fraud of this nature can take the form of selling a tinyinteractive banner but indicating to programmaticbuyers that it was a full screen video ad. There are manyinstances of MPUs (mid-page units) being sold as pre-roll video, a much more valuable format. Ads.cert canverify that the indications being sent about the format ofan ad are accurate, verified, and unmodified duringtransit. In addition, Ads.cert is far more technologicallysecure. It’s not simply a text file like ads.txt, but rather acryptographically secured signature. Fake impressionshappen because fraudsters can manipulate ad variablesanywhere down the ad supply chain. Ads.cert is intendedto stop this from happening.
Adoption is going to be far slower than ads.txt, however.The implementation hurdle for ads.txt was extremelysmall; publishers merely had to add a text file to theirwebsite, and still significant adoption took ~18 months.Ads.cert requires implementing the OpenRTB 3.0protocol on a site, which has not-insignificantengineering costs associated with it. Not only does thismean that current adoption of Ads.cert is essentiallyzero, but also that full adoption will take years.
Ads.txt adoption:
82%Ads.cert: still
waiting for launch
Source: Pixalate, MAGNA
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Supply Path Optimization: Squeezing FeesFraud is just one element of how the programmaticlandscape is being molded into fighting shape now thatbrands and publishers are finally pivoting their focusfrom spending growth and data granularity. Another bigcomponent is supply path optimization.
Unlike combating fraud, or low viewability, supply pathoptimization is not focused on avoiding valuelessimpressions. Instead, supply path optimization is anattempt to find the most efficient path between buyerand seller, with the fewest number of intermediary fees.The goal is to give media buyers the ability to bid on andwin inventory at the most reasonable price, while lettingpublishers maximize their revenue over the long run.Essentially, it means minimizing the ‘tech tax.’ Thisnecessitates measuring the value provided by each stepalong the purchase path, and trimming the bloated feelayer between brands and advertisers.
Given the significant overlap between available inventoryacross most exchanges, it’s increasingly important todifferentiate the value proposition of one compared tothe other based on something other than cost.Exchanges now have table stakes of being fraud free,having global direct publisher scale, selling brand safeinventory, enforcing ads.txt, being transparent with feestructure, and offering sufficient technical infrastructureto provide a satisfactory purchase experience. Theproblem being solved with supply path optimization isthat there are now so many programmatic auction layersand inventory duplication through header auctions, thereare now 10 different ways to access the same inventory,each one possessing a different fee burden. Because 1st
price auctions make fees far more transparent, it’s mucheasier to compare one service provider to another andcut out ones that are charging too much compared topeers.
This paring down of the tech tax has not been subtle. Theimpact of the push to minimize fees can be seen fromOpenX’s mass layoffs and business strategy transition atthe end of last year, to Rubicon Project burning throughcash to stay afloat as customers questioned their feetransparency. It can be seen in Index Exchange’s auctionpolicy shifts, to AppNexus’s move into the Xandrmothership. These are the good outcomes from largerplayers fighting over market share. There are also manycasualties of fee squeezing, including Optimatic, GamutMedia, and Centro, among others.
There are some additional services arising in the wake ofthis pressure to reduce fees. This includes path mappingservices like Amino, who can more clearly showimpression level insights about purchases to better auditthe fees going into each part of the supply path. This isn’tbrands squeezing the tech fee layer by replacing it withother services, however. The amount by which supplypath optimization and fee auditing can squeeze fees on apercentage basis is far beyond the price of a few servicesto track programmatic operations.
Over time, like all mature industries, programmaticadvertising is going through a maturation process. Withlimited options for differentiation, exchanges and SSPswill compete primarily on price and convenience, causinga multi-year decrease in margins.
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A Smart Contract is an Enforced ContractFee transparency in the supply path is important, buteven more than that, it is important for both brands andpublishers to maintain confidence in a complicatedenvironment that agreements and contracts are beingfollowed. Programmatic advertising, and marketing ingeneral, has become extremely complex, and contractsare difficult to monitor and enforce. That means thattech companies can occasionally hide their strategiesfrom partners and clients, and use questionable tacticsto potentially increase take without anybody noticing.That’s where smart contracts come into play.
Brands and their agencies execute programmaticcampaigns with a list of terms and conditions, and thereality is that in digital advertising the contracts anddeals are so numerous that nobody is checking them.Advertisers make a deal with a digital publisher and thecontract states that the publisher will deliver a certainnumber of impressions to a certain list of users in acertain geographic area, at a certain time and with acertain frequency cap. In most cases because of thedifficult logistics of verifying everything, a brand has totake a site’s word for it.
In order to check for themselves, a brand typically has topull a large number of reports from a large number ofplatforms and stitch it all together, and do that on aregular basis. As a result, a bad actor could send thoseimpressions anywhere with no penalty. A smart contractcompany at its most basic level is able to check thatterms and conditions of contracts are met in real timeand verify that all campaigns are proceeding accordingto the expectations of both sides (smart auditing).
Smart contract providers are valuable because they arelinking up multiple platforms through API connections,and connecting DSPs, 3rd party verification providers,publishers, exchanges, and buy side platforms, andmaking it so that all those platforms can speak to eachother. It allows for automatic reconciliations of bookingsand billings and ensure that ads were delivered whenthey’re meant to be delivered. In addition, because thecontract terms and legal enforcement of those terms areembedded within the contract themselves, they can betransferred between parties as advertising futuresmarkets of sorts, with the smart contract exchangeacting as the equivalent of the clearinghouse in financialmarkets (e.g. NYIAX).
It might sound like with all the concern around fraud,non-viewable impressions, undisclosed fees,unaccountable partners and unenforced contracts, thatit would be easier for brands to just concentrate theirspend in private marketplaces where they have far morecontrol and visibility around who is executing and how.The issue is that the internet continues to grow, and withevery passing year there is a larger and largerfragmented long tail of consumers spread across moreand more websites. If a brand wants to find theiraudience in totality, they are going to need to engagewith sites beyond the top tier of premium publishers, andwalled gardens, and that means the open exchange.
The more constraints a brand puts on a programmaticline item, the less scale it is going to have. If a brand hasa database of high value audience cookies that are verylikely to convert, they don’t care where those consumersare found, the advertiser wants to ensure thoseconsumers are being exposed to their campaign. Findingsomeone who is right is far more valuable than findingsomeone in the right place. A brand can not restrictthemselves to a certain PMP or a specific site orgeography, they have to search for those users whereverthey’re consuming media. Fewer restrictions means morescale, and as brands move into safer environments withmore controls, they’re sacrificing scale.
The open exchange remains less safe than the privatemarketplace environment, but it is a long way from theopen exchange of 2010; with the closing of most adnetworks, and wide adoption of ads.txt among otherthings, the open exchange is far more likely to seebrands buying what they think they’re buying for a fairprice. In the past two years alone, programmatic displayad fraud has dropped from 23% of impressions, to 9% ofimpressions, and is now very similar to the fraud risk ofpublisher direct inventory.
Source: Integral Ad Science
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Transparency Winners / LosersCleaning up the programmatic ecosystem is good forboth brands and publishers. That being said, initially themost value is likely to accrue to publishers because morecampaign money will make its way through the networkof ad tech platforms and get through to them.
Furthermore, while the losers of controls on fraud andresellers are clearly the bad actor intermediaries that willbe squeezed out of the marketplace, the impact of thematuration of the programmatic ecosystem and the
resulting squeeze on margins is not as one dimensional.There have been many marketplace participants thathave had to change business model or downsize as aresult of the pressure on margins, and there willundoubtedly be more consolidation in the ad tech space.At the other end of the process, however, there willemerge several much larger players that may havediminished margins, but also far greater scale andinfluence.
Publishers are going to not only see higher yield throughreceiving a greater share of brand advertising dollars, butprices will also increase. Controls in the marketplace havethe effect of significantly reducing available inventory.
Brands may benefit to a lesser degree than publishers, butthey’re also going to see gains from the reduction in thetech tax. Furthermore, as fraud rates are compressedtowards zero, programmatic becomes even more attractive.
DSPs with sufficient scale to withstand margin compressionwill find themselves in a far less crowded programmaticlandscape in the years to come; top DSPs includeDoubleClick, The Trade Desk, and MediaMath. In the verylong run, it’s possible that margin compression reverses assmaller competitors fall by the wayside.
Ad Tech companies are going to feel the squeeze on marginsthat come in every mature industry. The writing is probablyon the wall for all but the top five players in the tech stack, aslower margins are only weathered with volume.
Fraudulent Sites will be squeezed out of the ecosystem bypublishers adopting ads.txt, as well as by brands ensuringthey’re only paying premium video CPMs for premium videoinventory after ads.cert is implemented.
Resellers and Arbitrageurs will find it increasingly difficultto insert themselves into the programmatic transactionprocess. Brands are increasingly savvy about taking theshortest path to a publisher in a programmatic campaign,and there are more and more automated services tomeasure the added contribution of each player along thatpath.
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Is something wrong with the programmatic ecosystem? Ifso, what can be done to solve those problems?
The root cause of the problems in the currentprogrammatic ecosystem is a lack of primary marketparticipants. The convoluted nature of mostprogrammatic transactions opens the door to bad actors,excess fees, breaches of contract, and confusion.Allowing brands and publishers to transact directly in astandard way with full transparency is the solution,especially if those controls can be scaled up to the size ofthe current programmatic marketplace.
What is a smart contract? What does it allow brands ormedia owners to do that could not be done before?
Smart contracts are the next wave of automation inadvertising. They enable contract and deal terms to beautomated under a pre-defended set of rules. In additionto the automation, smart contracts allow for the parts oflegal agreements that can be digitized and automated tobe more easily checked and enforced. Simply put, smartcontracts are the next wave of automation, and are acritical step towards inserting trust and accountabilityinto advertising.
Bad actors have historically found a way to circumventad tech safety controls. What makes this time different?
Because smart contracts leverage blockchain technologyand operate within blockchain ecosystems, the parties toa contract are required to operate within the definedrules of that system. If they do not, the actions they takeare not included in the blockchain ledger and verified.Because payment is tied to the contract terms being met,breaching the contract is significantly more difficult thanbreaching a standard contract. In addition, security isbuilt into the smart contract protocol from the ground uprather than being bolted on like what was done with theinitial protocols of the internet.
What is digital upfront buying? How does NYIAX’stechnology allow for that, and what new opportunitiesdoes digital upfront buying provide to brands orpublishers?
Digital upfront buying isn't all that different than what wetraditionally consider upfront buying. It is negotiatingyour media contracts with preferred partners, andcommitting to buy large blocks of inventory in return forpreferred pricing or deal terms. Our marketplace makesupfronts available every day by allowing publishers to listspecific future inventory as far into the future as theylike. With NYIAX, publishers don't list "remnant" or lowervalue inventory and give it to the highest bidder. Theycan make their most premium inventory available toselect partners or an open market. This will organicallylead into a futures media market once smart contractsbecome more familiar and commonplace in advertising.
Many NYIAX initiatives sound like they’re designed toincrease buyer and seller control over how advertisingtransactions work. Is there still a place for the openprogrammatic exchange?
We believe that an upfront exchange is a key newinnovation that is complementary to the RTB automationthat has been prevalent during the last wave ofautomation.
It sounds like NYIAX is trying to make advertisingexchanges more like financial exchanges (not surprisinggiven its pedigree). If successful, what will that mean forthe advertising economy in the long run?
When we introduce more fanatical rigor to theecosystem, and the structure and certainty that smartcontracts can provide, brands and publishers will feelmore comfortable treating smart contracts as self-contained agreements rather than the framework ofagreements between two specific parties. As that trust incontracts and trading increases, the overall capital flowin the advertising market will increase. Our main goal isto increase the size of the market and not just movespend from one channel to another.
Luke StillmanSVP, DigitalIntelligence,
MAGNA
Richard Bush, President, NYIAX
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The On-Demand TV Spending OpportunityConsumers have made a significant behavioral shift fromlinear television to on-demand TV. Ad spend typicallyfollows consumer time spent at a slight lag, and thegreatest opportunities for ad spending growth are theareas where there is the greatest difference between theshare of time that consumers spend with a media format,and the share of budgets that are flowing to it. Anytimethere’s a new medium whether web, mobile, social, orsomething else, there is a slingshot effect when eyes getfar enough ahead of spending to be egregious.
Mobile advertising spending has finally caught up toconsumer time spent on mobile devices, with both
representing around ~40% of the total pie. On-demandTV, on the other hand, represents 12% of total consumertime spent, but just 2% of budgets. This is significantly upfrom last year’s 1% of budgets, but there is still a hugegap there, and that’s why on-demand TV, and OTTspecifically, has the largest growth potential in theintermediate term.
On-demand TV also has the benefit of being moreflexible, and more easily harmonized with digital devicegraphs. That allows for more seamless delivery of an adexperience that is personalized, relevant, seamless,engaging, and actionable.
Time Spent with Media 2019 Time vs. Spend by Device
Linear Television
Desktop / Laptop
Other(Print + Radio)
On-Demand TV
Mobile
2019 Time Spent Share (%)
21 12 7 42 17
29 17 41 122
2019 Ad Spend Share (%)
Source: MAGNA, Nielsen
Much of that on-demand television is streamed over theinternet. Over the next few years, that share will growlarger and larger, and eventually the delivery mechanismdifference between cable/satellite and digital will besomewhat pedantic, especially as 5G set top boxes arerolled out to consumers. Eventually, there will be nochoice but to have all video content delivered via IP.
Digital infrastructure means that many of the sametechnologies that are used on PC and Mobile can moreeasily translate to television screens, however. Thisincludes leveraging consumer data for targeting and one-to-one conversations and segmentation.
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OTT Establishes its Dominance vs. the STBConsumer access to video content on television screenshas shifted significantly as well. Traditional MVPDsubscribers are eroding, and will continue to erode, asmore and more consumers cut the cord. Some of this willbe cushioned by skinny bundles and vMVPDsubscriptions, but the bulk of shifting viewing is goinginto app-like OTT environments. Whether consumers arestreaming linear content, or accessing SVOD services,the ability to deliver targeted advertising is streamlinedon digitally delivered infrastructure.
There is also a fight for control of which provider candeliver what content and which services to consumers.The video delivery landscape includes media owners,distribution companies (whether CTV or MVPD), ACRsystems like Gracenote, creative solutions like Brightline,and brands.
MVPDs still control a (shrinking) majority of contentdelivery systems to consumers, but the set top box is not
as well suited for today’s video advertising landscape ascompared to a connected television. Deliveringaddressable advertising through a set top box requiresband-aids, paper clips, and workarounds. Whether thistransition away from set top boxes and to fully digitalvideo delivery infrastructure is allowed to happen willdepend on whether MVPDs can successfully defend theirturf. The next few years will see a delicate dancebetween the power brokers in the TV video landscape,namely content creators, distribution networks, andbrands.
Finally, when looking at the total addressable landscape,it doesn’t just include all TV subscribers and all OTTsubscribers. Not only are many set top boxes still un-upgraded and unavailable for addressable campaigns,but also there are plenty of OTT video platforms who stillsell much of their inventory on demo guarantees or totalviewers rather than on an audience-first addressablebasis.
123
98
2
28
126
86
11
63
132
66
26
85
Total Households Total Traditional MVPD Subs Virtual MVPD Subs Total OTT Subs
2016
2017
2018
2019
2020
2021
2022
2023
55 58 69
85
63
98
STB Addressable Homes Total Addressable Homes
2016
2017
2018
2019
2020
2021
2022
2023
Source: MAGNA, Nielsen, FCC, Public Information
Addressable Homes Breakdown (Millions of Homes)
Household Video Access Breakdown (Millions of Homes)
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eTotal addressable homes have increased to nearly as many total homes as traditional linear television subscribers (85 million vs. 86 million in 2019). There is substantial overlap between STB subscribers and OTT users, but OTT will increasingly take over from linear STB as the primary addressable access point to consumers.
14
Audience Targeting on TV Gaining TractionAddressable advertising (individual ad insertion on TV)has struggled for some time to get off the ground. That isfor several reasons. First, there were issues of scale.When a campaign is executed on addressable televisiontoday, brands are not partnering with a certain providerand their subscriber base. Instead, brands are going toDish, and Xandr, and NCC, and Roku, and Hulu, andSpotX, and any number of other providers. Today’s 85million total addressable homes compares to 86 milliontotal traditional MVPD subscribing households.
In addition, for a long time addressable advertising hadan unfavorable cost profile. Providers would push aneCPM approach. For example, if an automaker wanted toreach luxury auto intenders, they could achieve a lowercost through addressable advertising. The issue was thatmany brands still buy on an age/gender basis, and manybrands still use volume based success metrics, and manybrands don’t see waste as valueless. For this reason,addressable advertising’s cost premium was consistentlytoo high. While it remains more expensive (as does everycampaign augmenting technology), the gap is not nearlyas severe as it has been in years past.
Not only has addressable advertising finally gainedsignificant traction, but also the balance of power isshifting towards digital delivery via OTT. The size issignificantly higher than total spending on STBaddressable, and growth will be significantly higher forthe foreseeable future.
39%
15%16%
5%
2018 2019 2020 2021 2022 2023
OTT Growth
STB AddressableGrowth
885
1,230
2016 2017 2018 2019 2020 2021 2022 2023
3,792
8,601
2016 2017 2018 2019 2020 2021 2022 2023
18%
26%
2015 2016 2017 2018 2019 2020 2021 2022 2023
Source: MAGNA
3,178
8,886
2016 2017 2018 2019 2020 2021 2022 2023
OTT Spending ($ Millions)
Growth by Video Method (%)STB Addressable Spend ($ Millions)
TV Addressable Spend ($ Millions)Addressable Share of Local CableA
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(Definition: Local Cable & STB VOD)
(Definition: STB Addressable + OTT Sold on an Addressable Basis)
15
OTT and CTV-Based Addressability Cleaning up the programmatic ecosystem will not be theonly result of the new peak data landscape. Brands willalso look to leverage the existing data and technologythey have for TV. This is already happening inaddressable and OTT as laid out on the previous pages.There is still a tremendous amount of potential spendingthat is out of reach to addressability, however.
Looking at all ad spending on the television set, localcable TV and OTT (the video formats allowing for 1:1addressability on a technical basis) still only represent~14% of total advertising spending. The remainder –national broadcast, national cable, and local broadcast –makes up the lion’s share of total television spending. Ifaddressability on TV is going to break out the same waythat addressability in digital has, it’s going to requireunlocking national inventory for individual ad insertion.
There are several initiatives (detailed below) aimed atsolving the technology requirements for unlockingnational TV to addressable methods. This isn’t new, asProject Canoe (launched in 2008) was a joint effortamong all major cable companies in the US to delivertargeted ads over STB tech beyond local cable. Theprimary hurdle (then, and now) has been the reluctanceof content providers to cede more power to MVPDs. Withthe expansion of the CTV base and the option to sendcreative overlays to individual sets over the top, there isnow a separate path to the consumer for nationalbroadcasters that circumvents the set top boxaddressable method.
One key factor that will determine how quicklytechnological tests become a reality is how wellplatforms can maintain the consumer experience.Consumers have shown receptivity to relevantadvertising, but not if it comes at the expense of theirviewing experience. Samsung’s previous forays intooverlay technology resulted in projecting ads overcontent. Vizio had issues around ensuring legal opt-infrom consumers and ensuring all data usage is withpermission. Consumers already are resentful of annoyingads in digital media, but they’re used to TV being aseamless experience with a clear separation betweencommercials and content. Ensuring an experience that isup to the standards of television that consumers havecome to expect will be critical for the effectiveness,adoption and long-term viability of addressable overlaytechnologies.
NationalTV + Local Broadcast
LocalCable TV
OTT86%
Video Ad Spending Breakdown 2019
Project OARNielsen Ad Insertion InitiativeNielsen is sponsoring an initiative to test dynamic adinsertion in live linear national broadcast TV. They havepartnered with CBS, A&E, MediaTek, along with utilizingtheir Gracenote product for ACR, to dynamically insertcreative into live linear TV.
The primary purpose of the pilot program will be to ensurethe user experience is frame accurate, andindistinguishable from other live ads. In addition, are thereminimum bandwidth requirements for a seamlessconsumer experience? What happens if a user pauses alive replacement ad? What is the required lead time forcreative fingerprinting? What is the impact of variable adtime in live sports and news? Does pod position impactACR? What measurement and reporting data is availableand what other issues are there that need to be ironed outbefore commercial roll out? These are just some of thehurdles that remain between where national TV is now andwhere it needs to be to unlock addressable advertising.
Project OAR is a Vizio-led initiative that includes Disney(ABC, ESPN, Freeform), Freewheel, NBC Universal,Discovery, CBS, Xandr, Turner, Hearst Television, andAMC Networks. In addition, ACR will be provided by Vizio-owned Inscape. The purpose is to create standards fordynamic ad insertion in linear TV beyond local cable. Thestandards will be fully open and universal and allow fordifferent tech partners and different media owners in thefuture depending on the campaign, but with the samestandards so that each campaign can be technologicallyinterchangeable.
The consortium aims to have a working product demo mid-2019, with full deployment aimed at 2020. Because Vizioonly represents a slice of the CTV market, the long termadoption of open standards in the dynamic addressable TVspace will depend on a push from brands and willingness tocooperate from other CTV providers.
Source: MAGNA
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Total: $63 Billion
16
Creative Personalization at ScaleBrands will also pivot to leveraging the existing trove ofconsumer data not just to target the best inventory, butalso to improve creative. This will take place both on PCand mobile, where creative personalization options areexpanding from very basic DCO (Dynamic CreativeOptimization) technology, to creative versioning invideo. This will all be augmented by the expandingbreadth of consumer data used to cater ad experiences.It will also occur on connected television sets, where newaugmented ad experiences are available in OTT thatcreate a more compelling user experience and a host ofmeasurement improvements.
In digital, dynamic creative optimization (DCO) has beenused for several years. In this process, banneradvertising components are assembled on the fly, andthe best performing versions of the ad are the ones thatare delivered more frequently, optimizing based onconsumer actions. The features that change includecolors, sizes, messaging, product offers, and calls toaction, among other features.
The versions that are delivered are optimized aroundwhat consumers respond best to, rather thaninformation known about each specific consumer andtheir point in their consumption journey. This is stillextremely valuable technology, and it is still underutilizedby most brands already executing programmatically(adding DCO on top of a programmatic execution is amarginal incremental cost compared to typical results).
Dynamic creative optimization is primarily used forretargeting at the very bottom of the funnel. DCO is nolonger the cutting edge of creative personalization indigital, however.
That honor goes to using dynamic creative for advancedpersonalization. The last mile of programmatictechnology can be leveraged to use data and attributesto identify a high value audience and not just purchasethe impression where they are viewing media, but hittingthem with the correct message out of dozens, orhundreds, or thousands of potential messagingpermutations. While this is still focused on drivingactions, measurement can also include engagementthrough Millward Brown surveys, footfall attribution, andmore, to tie engagement to sales.
If dynamic creative optimization is used by only a smallfraction of campaigns, advanced personalization is usedby even fewer at this stage. The tools are in place inmany areas, though. Facebook has a dynamic creativesolution. YouTube has its directors mix, DoubleClick hasDB360 and DoubleClick Studios, and even somepublishers like Time Inc. or Conde Nast have partneredwith a dynamic creative exchange solution to offerintegrated addressable messaging solutions.
Experimentations in Enhanced Consumer Advertising Experiences
Source: MAGNA, IPG Media Lab
The MAGNA Media Lab has many studies that supportthat consumers engage more fully with enhanced adformats:
Why, then, is technology so underutilized on the creative front? Creative personalization is used in less than 2% of total campaigns. Part of the issue is one of comparison -most dynamic creative opportunities are lower in the ad funnel, where cost efficiencies are the most critical and the most scrutinized. There is a premium on dynamic creative CPM delivery via ad tech platforms of 10-20%. These costs can be a difference maker when the alternative is investing in incrementally effective laser targeting on the inventory front.
Why should creative personalization turn the corner now, then, when it didn’t a few years ago? Firstly, as with all innovations, the cost premium has compressed from when these same opportunities first entered the advertising economy. In addition, given the regulatory environment, it will be increasingly difficult to keep targeting more precisely. Even a basic form of consumer targeting data can yield tremendous results when enhancing the creative experience, however.
Interactive Advertising: 47% lift in time spent with ad; 38% increase in brand recall; cost per recall 52% better.
Camera Lens Advertising: 32% more engaging than pre-roll video; 4x increased retention vs. pre-roll.
Haptic Advertising: 46% increase in brand excitement; 62% increase in brand connection, 50% lift in favorability.
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17
What You Do > Who You AreOne of the most important tenets of creativepersonalization is that your behavior is more importantthan who you are. Being a male age 29-44 with a highincome makes one far less likely to be a luxury autopurchaser than having visited a luxury auto website, orsearching for information about new cars.
Data being used to cater creative before it is deliveredincludes behavioral data i.e. what a consumer has done,interest data i.e. what a consumer is buying and learningabout, and signal data i.e. what is happening at themoment, whether it be local offers, weather, orsomething else.
Furthermore, when creative personalization is used tomake iterations of a video commercial, the dynamicelements are not the most polished elements of thevideo. Typically a dynamically generated video ad hasseveral components that match throughout the video,interspersed with varying messaging overlays, offerings,product highlights, and more. What results is essentiallya hybrid between video creative and static creative.However, as with most advertising, having the rightoffering to the right person is far more important than apolished ad experience. It doesn’t matter to theconsumer that something is the perfect production, aslong as it’s for the right product at the right time.
One critical factor to consider when thinking about theexpansion of dynamic creative advertising, is that theconstant cost and measurement pressures of today’sadvertising economy are forcing brands to focus furtherdown the funnel. Because CMOs must show direct
connections between ad dollars and sales, brands havefocused on lower funnel activity where it’s easier toquantify results.
This pressure has shifted significant portions of totaladvertising spend to lower funnel activities in campaignsfocused on actions more than awareness. Twenty yearsago, less than 1/5 of the total advertising market wasfocused on driving consumer actions. That is nearly 1/3of total budgets today. That doesn’t even consider thefact that this analysis excludes search advertising, thelowest, most direct bottom of the funnel advertisingformat (the growth of search advertising since 2000would overwhelm any other developments displayed inthe charts below). This is a result of those marketerpressures to consistently deliver measurable results, butalso because there are so many more opportunities forlower funnel advertising as consumers incrementallyshift to digital formats.
Because more marketing spend is going to the lowerportions of the funnel, leveraging data to modify creativeto better drive actions makes increasing sense. In thoseareas not only are brands already using all the requiredtechnology and leveraging all the required data forimpression selection, but also the impact is going to begreater when creative is modified because these are theconsumers where brands know the most about them andtheir situation and what they’re in the market for.
Ad Spend Share by Strategy (%)Lower Funnel Spending ($ Billions)
Source: MAGNA; Lower funnel and ad share analysis excludes search advertising.
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29 34
53
2000 2010 2019
82% 78% 69%
18% 22% 31%
2000 2010 2019
Action / Lower Funnel Advertising
Awareness / Upper Funnel Advertising
18
Dynamic Video Creative ProductionCreative personalization on PC & Mobile is far moreabout augmenting the inventory and personalizationcapabilities already being leveraged for programmaticcampaigns. The biggest innovation is the ability to makemultiple video creative iterations based on consumerdata. Using variables like time, date, weather, geo,exposure to media, user databases, sales information,and more, hundreds of thousands of videos can becreated for a single campaign that are catered to
maximize personalization and therefore engagement.
Video personalization comes from at the more basic levelchanging the messaging through overlays. These caninclude retail offers, financing offers, conversionprompts, calls to action, and more. More advancedpersonalization involves changing the storyboard(inserting different variable scenes into a video).
The All New Car!
Test Drive at your Local
Dealer Today!
For Weekend Warriors!
Get Out of the Rain and Into Your New Car!
For Rebels and Racers
Take Your Family for a Luxury Spin
For Weekend Warriors!
Data Inputs
Building Personalized Video Creative
Although almost all creative personalization istargeted at the lower half of the advertisingfunnel, it is typically used for slightly less directaction oriented KPIs as static banners or staticsocial newsfeed impressions. For this reason,brands frequently take what they have identifiedas high value audiences, and attempt to useadditional data signals to ensure the video isspeaking in a voice that each consumer will findmore authentic, relevant, and engaging.
Because the incremental features used to makeiterations of a video are very simple (overlays,local messaging, standalone text on screen,etc.), the additional creative cost to makemultiple iterations is very small and there is noincremental technological requirement over andabove the ability to make a single regular videoad creative on its own.
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19
Enhancing Personalization on CTVsUnlike PC and mobile where almost every campaign ishyper-targeted, there is far less targeting on connectedtelevision and OTT streaming. For this reason,technology to personalize creative on CTV is less aboutfinding the exact message that will spur a consumer toimmediate action, and more about making theexperience more relevant, engaging, and impactful.
The same data inputs and triggers are used, but ratherthan offering all consumers tightly related variants of asingle video ad, CTV enhanced creative can takedifferent forms depending on whether the campaign goalis engagement, targeting, shoppability, or more.
There are multiple types of enhanced ads that brandscan leverage, and which one is used depends on a host ofpredefined data signals that bucket consumers as likelyto buy, competitor customers, considering, or an infinitenumber of nuanced definitions. Because many OTTexperiences have ad breaks anyway, giving consumerssomething to engage with during those breaks can notonly be effective and compelling, but also providingadditional value to a consumer.
While these are some examples of enhanced creative types available on connected televisions, there are plenty of variations. These include dynamic expandable advertisements, video extenders i.e. ‘watch more,’ dynamic video selectors (choose which of these videos you want to see for an ad), transactable overlays where a consumer can begin shopping direct from the TV with personalized offers, and many more.
Furthermore, personalization can be used to add specific dynamic calls to action i.e. buy now, learn more, save now, and leverage specific moments, such as wake up/bedtime routines, winter/summon months for some products, UV index for others, retailer locations for geolocation, harmonize with free standing print inserts in-market, and many more.
Not surprisingly, results were significantly higher from personalized and enhanced creative, including recall increases of 51% for interactive overlays, and 24% improvements in foot traffic.
Connected TV Enhanced Creative
Branded Overlay: Leverage data to create new personalized ad opportunities within the context of a general advertising break.
Super Allergy Medicine!
Super Allergy Medicine!Super Allergy
Medicine!
Cat Allergies? Shop Now!
Seasonal Allergies?Send Info to
Mobile
Explore Our Allergy Products!
Cross Device Info: Send informationabout a product or brand to a mobiledevice to continue the conversation.
Immersive Experience: Explore a full personalized product lineup, see specials and offers, explore or have fun with a brand.
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20
Enhanced OTT in ActionThe full suite of enhanced ad experiences on OTT are stillbeing created and explored. Different KPIs, data sets,creative assets, and content environments lend
themselves to different formats. Below are a few real lifeexamples in action.
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Localized Overlay: One way of leveraging basic location, weather, or audience segment data is by combining regular high-production value TV-creative with information-rich localized overlays (in this case a dealer locator). This style of creative can also be used to drive different actions, or even offer savings.
In-Stream Interactions: Creative that offers anenhanced and interactive experience to augment userinvolvement can be done seamlessly in existing commercial breaks. In this case, that results in custom car color exploration, or a 360 degree car modelinteraction. These type of enhancements also have the benefit of being extremely low-requirement on thecreative side.
Full-screen microsites: Viewers can choose to leavethe standard stream experience and go to a full-screen immersive experience featuring robust and long-form brand content. In this instance that takes the form of a customized video carousel with additional branding material.
Source: BrightLine, Public Sources
35
28 2725
19 18
11
6 63 3
Install Base / User Scale (Millions)
The chart of install bases above compares severaldifferent metrics, whether install base of devices,subscribers across multiple device types, or linearTV/VOD subscribers. The point is to give a sense for thescale of some of the operators, and to emphasize howCTV manufacturers and OTT providers represent some of
the largest groupings of viewers. This means thattechnology solutions on those platforms, such asenhanced and personalized creative for OTT, willcontinue to be a focus for tech development because itrepresents a large and increasing share of consumerviewing.
21
Personalized Creative Benefits Most BrandsBrands need to focus on not overdoing it when engagingwith personalized creative, especially on video. Treadingthe line between valuable additional capabilities and anenhanced experience, and intrusive and annoyingadvertising, can be tough. Consumers have shown indigital media that they have disdain for blatantlytargeted advertisements, and also disruptiveexperiences. Consumers all state that targeting isannoying, unless it’s something that they’re in themarket for, in which case campaigns performtremendously and it’s a great consumer experience.
This is likely going to hold true for OTT as it startscarrying personalized creative and enhanced ad formats.Consumers like having control and agency over the adexperience. However, if consumers are not missing outon anything during un-skippable ad breaks, consumershave shown the desire to interact with a new andredefined TV experience.
Furthermore, because many of the enhanced creativeformats are such that the intrusiveness is minimalwithout a consumer doing something like enteringinformation, or clicking a button, consumers can self-select into the enhanced experience. In addition, if youlook at the most successful ad formats over the pastdecade in digital, it is primarily formats where theconsumer has some agency over the experience.YouTube TrueView has the option to skip, so consumersthat watch beyond the skipping point have self selectedinto a much more likely bucket of consumers. Search hasshown tremendous scale and that’s an area whereconsumers control the inputs. Social media the thingsthat are inserted into the newsfeed are stronglycorrelated to a user’s network and interests. If the sametype of experience can be leveraged on OTT, then it’slikely to come down on the beneficial side of thespectrum.
Who should engage with dynamic creative ad formats orenhanced creative on OTT? There is a cost premiumalthough it’s not prohibitive (~20%, not 50-100% as itwas in past years), so a brand with a single product thatis targeted to everybody would possibly not get enoughvalue. Outside of that, however, almost every brand hassome data that they use for targeting, and somediversification in their product lines, where they canleverage targeted creative.
There are two types of advertisers in particular that arebest suited for creative personalization, however:
Action Oriented KPIs:
Brands who operate low inthe funnel see tremendousgains by engaging withcreative personalization.Not only are those brandsalready using all the requireddata and many of therequired tech platforms they will need, but also theimpact is going to be greater because these are theconsumers where brands know the most about them andwhere the likelihood of them engaging is the highest andcampaign performance increases will be the largest. Thiscan hold true for finance, retail, or even auto and CPGbrands.
Multiple Product Lines:
The other key brand forpersonalized creative is abrand with multiple productlines, even if they’refocused on upper funnelbrand advertising. This isespecially true for brandstrying to manage themigration of consumersmoving from one portion of the product line to another,catering creative designed to keep all customers withinthe overall company portfolio. This can also be useful forconsumers who are customers for certain elements ofthe brand portfolio, but who are loyal to a competitor inother portions of the brand portfolio. Using that data toleverage potential affinity to the company forconquesting can be extremely valuable. This is especiallytrue for CPG, and food & beverage brands.
Adopting an audience-first media strategy which focusesaround precision marketing and a person/place/momentframework is something that many brands have beenmoving towards, and it is the perfect structure forpersonalized creative. Creative that has different goalsor objectives, multiple media touchpoints, multipleproducts, and multiple reasons to believe, is the perfectstructure for dynamic creative. Campaigns featuring 2 ormore products also result in significant efficiencies incost to develop which can mitigate even the minor costof personalization.
Best Candidates for Creative Personalization and Enhanced Creative
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22
Luke StillmanSVP, DigitalIntelligence,
MAGNA
Robert Aksman,Founder, Chief Strategy
Officer, BrightLine
Technology has transformed the TV landscape dramaticallyover the past few years. Has this extended to TV creative?
TV has evolved dramatically thanks to connected devicesenabling personalized, on-demand, and engaging contentexperiences. BrightLine’s mission is to make sure that thead experience keeps pace. As TV continues its inevitablemigration to streaming, the TV ad experience will evolve atan increasingly rapid clip.
What new advertising capabilities does Brightline open upfor advertisers on television?
BrightLine’s technology allows advertisers to run dynamic,addressable, interactive, and sequenced advertisingexperiences within their connected TVs. The historic notionof a commercial being “static” and “15 or 30 seconds” hasbeen shattered. The TV ad experience has been redefinedwith opportunities for viewers to self-select into extendedad experiences, micro-interactions that maximize attention,or even take direct actions like purchasing.
Consumers have pushed back on intrusive ads in digital; arethey receptive to more interactive ads in their TVexperience? What makes a good TV advertising experiencecompared to a bad one?
Thankfully, I think as an industry we’ve learned from themistakes of “digital”, and are only bringing forward the bestof what digital had to offer – leaving the worst behind – andpairing that with the incredible storytelling power andundivided attention of TV. A good TV ad experience is atonce relevant to the viewer, but also provides some kind ofvalue or reward to audiences. That value can come in manyforms, whether it be helpful information, additionalcontent, coupons, or something as simple as a fun andentertaining interaction. We’re finding that if the adexperience is crafted with the ideal consumer experience asthe guiding light, then viewers engage at levels that areunprecedented by “digital” standards.
With the ability to add shoppability and direct responsecapabilities to TV advertising experiences, what newmeasurement capabilities are unlocked for brands?
With our commerce and direct response oriented adsformats, viewers are able to request and receive directcontact from brands, bringing measurability to new levelsas TV becomes synergistically linked to web and mobiledevices. Further, just the raw digitization of TV in generalenables a new crop of digital attribution companies andmethodologies.
New advertising technology on TV sets has been pushedevery year for the past several years, and yet TVadvertising has only changed on the margins. What isdifferent this time?
The critical difference between the failed attempts at “iTVads” of yore, and the those available via connected TVs oftoday, is scalability and capability. In the past, there weresevere limitations thanks to legacy cable boxes andinfrastructure not being able to support truly immersive,next-generation ad experiences. There was also thechallenge of scale, since only the MVPDs were able to makethese ads available, via their own local avails, which flew inthe face of what media buyers wanted. Today, thanks toconnected TVs, EVERY ad can be enhanced or targeted, viathe big national sellers for maximum scale.
What is the biggest hurdle today to all brands engaging withenhanced TV advertising. How do you see this marketplacedeveloping over the next three years?
The biggest hurdles is education, getting hands onexperience, and breaking through the muscle memory ofthe way TV has historically been done. That applies toenhanced formats and also advanced targeting. Asviewership via these devices is now well past 10%, and onits way to an inevitable end point of 100%, those building aknowledge base today with these advanced features aregoing to have a clear edge when the rest of the industryscrambles to catch up once it tips to a majority in the next 3years. Forging forward now, building the knowledge base,best practices, and learning plans for the future of TV adexperiences is critical since we already know the future ofTV, and it’s streaming.
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23
Glossary
1st Price Auction: A 1st price auction is one in which thewinning bidder pays their bid price.
2nd Price Auction: A 2nd price auction is one in which thewinning bidder pays 1c more than the 2nd highest bid.
Ads.txt: Ads.txt is a tool created for publishers where theycan publicly declare which partners are authorized to selltheir digital inventory.
Audience Buying (Programmatic TV): Method by which adsare served to networks/programs/dayparts with the highestpropensity to reach target audience of a campaign. Usestechnology and audience data to deliver incremental reach.
Automated Guaranteed: Transaction in which inventory isguaranteed and pricing is fixed, with negotiation happeningdirectly between buyer and seller. Transaction processes areautomated but otherwise match a traditional I/O transaction.
Automation: Using technology to facilitate mediatransactions in a way that mirrors traditional transactions instructure.
Bid Shading: Bid shading is when an advertiser reduces theirbid below what they believe a good or service is worth. Bidshading is a necessary practice in 1st price auctions.
Clearing Price: The clearing price in an auction is the pricepaid by the winning bidder. In a 1st price auction, this isobvious (they pay their bid price). In a 2nd price auction,predicting the clearing price can be more opaque especiallywith incomplete information.
Consumer Surplus: Consumer surplus is the differencebetween the total amount a consumer is willing to pay forsomething, and the actual amount they paid. Consumers tryto maximize their consumer surplus by paying the leastpossible for a desired good or service.
CRM: Customer relationship management – a system formanaging a company’s interactions with current and futurecustomers.
Cross-Platform Targeting: Identifying and matchingaudiences across devices (desktop, tablet, smartphone, TV,OOH, etc.)
Deal ID: Unique identifier that associates a transaction withprearranged agreement details, typically used to increaseinformation in a transaction or change auction outcome fromstrict price criteria.
Deterministic Identification: Using login details to associatedevices with an individual user for the purpose of identifyinga user across all devices through which they access content.
Display-Related: Digital media advertising formats, includingbanners, video and social, i.e. all digital advertising formatsexcept Search. “Display-Related” is the addressableuniverse for programmatic development.
DMP: Data Management Platform, a user data store that isused for the centralization, management and deployment ofa brand’s audience data.
DSP: Demand-Side Platform, tech solution to allow buyers toaccess inventory across multiple exchanges and frommultiple media owners.
Dynamic Insertion: The ability to show a specific user aspecific ad, typically because of the characteristics of thatuser.
Exchange: Technology platform that facilitates the buyingand selling of ad inventory using various methods ofpurchase other than traditional I/O.
First Look: An agreement in which a buyer has priorityaccess to inventory in an auction environment.
Hash Linking: Associating an identifying tag with a specificuser through a cryptographic function that does not allowreversing that tag back into the identifying characteristicsfor that user. Current best tracking option for protectingPersonally Identifiable Information.
Header Bidding: A unified auction conducted by publishersoutside their primary ad server, which allows advertisers tosell inventory to the highest bids, regardless of source orpriority in the ad serving waterfall.
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Glossary (Cont.)
Household Addressable (Programmatic TV): Method bywhich ads are served directly to the households in which thetarget audience resides.
Invitation-Only Auction: Auction environment comparable toopen exchange, except only a select collection of buyers thathave been white-listed by the media owner(s) are allowed toparticipate.
I/O: Insertion Order in a direct buy (agency to publisher).Traditional method of buying media inventory.
Media Owner Cooperative: Partnership between mediaowners through which they offer premium inventory incontrolled auction environments; typically affiliated with asupporting tech platform.
Open Auction: Transaction environment in which any brandcan bid for offered inventory with few if any controls andlittle to no transparency.
PMP: Private Marketplace, where either one or a smallhandful of media owners offer inventory via programmaticmethods but with either limited invites for specific brands orpre-arranged pricing.
Private Transaction: Transaction between one buyer and oneseller where each is known to the other.
Probabilistic Identification: Using an algorithm that combinesnon-personally identifiable information to associate deviceswith an individual user for the purpose of identifying a useracross all devices through which they access content.
Programmatic Buying: The buying and selling of ad inventoryin an automated fashion. In the context of this report, itencompasses both RTB and non-RTB methods.
Programmatic Direct: A generic term for non-RTBprogrammatic transactions that is being replaced by morespecific terms as non-RTB technology matures.
Programmatic Universe: Total banner display spend plustotal video spend.
RTB: Real-Time Bidding, where an impression is offeredthrough an auction where bid price is the most important(but not only) characteristic used to select a winning buyer.
SSP: A tech platform used by web publishers to find the mostappropriate available audience and optimize pricing of apublisher’s inventory.
Statistical Identification: The process of identifying devicesacross sessions based on a series of non-personallyidentifiable data points and algorithms to narrow thesecharacteristics to a single or small handful of users.
Thin Auction: A thin auction is one in which there are fewbidders. This results in large gaps between bids, and likelycreates a significant gap in a 2nd price auction between thetop bid and the clearing price.
Traditional Transaction: Any transaction executed throughnon-programmatic means.
UDID: Universal Device ID, used to identify specific devicesacross sessions and apps.
Unreserved Fixed-Rate: A transaction in which price hasbeen agreed upon in advance but no guarantees on exactinventory or impression delivery have been made.
Viewability: Whether or not an impression was on screen forlong enough to count as being viewable. Viewableimpressions are gradually becoming the currency for anincreasing number of campaigns. For a standard banner inthe US, the requirement is that 50% of the pixels be onscreen for at least one second.
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Appendix
The Structure of the Programmatic Ecosystem
Flow
of
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Advertisers
DSPs Trading Desks Verification & Privacy
Exchanges DMPs & Data Suppliers Measurement & Analytics
SSPs Resellers
Publishers
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• The conclusions in this report were derived from: • Anonymous surveys & interviews with companies representing ad tech
such as Trading Desks, DSPs, SSPs, Exchanges, MVPDs, and other key technology players in the rapidly expanding ad tech landscape.
• Brands and Publishers• Existing MAGNA research• Other publicly available information• Internal Cadreon Resources
• MAGNA’s programmatic market size forecast model utilizes data from: • Aforementioned surveys & interviews• Existing MAGNA estimates• Past digital advertising growth rates• Regression modeling of various publicly available facts
Methodology
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MAGNA is the centralized IPG Mediabrands resource that develops intelligence, investment andinnovation strategies for agency teams and clients. We utilize our insights, forecasts and strategicrelationships to provide clients with a competitive marketplace advantage.
MAGNA harnesses the aggregate power of all IPG media investments to create leverage in themarket, negotiate preferred pricing and secure premium inventory to drive maximum value forour clients. The MAGNA Investment and Innovation teams architect go-to-market investmentstrategies across all channels including linear television, print, digital and programmatic on behalfof IPG clients. The team focuses on the use of emerging media opportunities, as well as data andtechnology-enabled solutions to drive optimal client performance and business results.
MAGNA Intelligence has set the industry standard for more than 60 years by predicting the futureof media value. The MAGNA Intelligence team produces more than 40 annual reports on audiencetrends, media spend and market demand as well as ad effectiveness. To access full reports anddatabases or to learn more about our subscription-based research services, [email protected].
IPG Employees can access and download MAGNA reports through the MAGNA Atlas:https://atlas.magnaglobal.com/
All work is property of MAGNA and cannot be used or reproduced by any person or company fordirect commercial activities without written authorization.
© 2019 MAGNA, New York, NY, USA – All Rights Reserved
About MAGNA
MAGNA Contributors
Author: Luke StillmanVP, Digital [email protected]
Editor: Vincent LetangEVP, Director of [email protected]
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